Management and industrialisation in Africa

Blogs
12/09/2017

By Daniela Scur and Nicolas Lippolis, University of Oxford

The manufacturing sector has traditionally been seen as an engine for development due to its high propensity for productivity gains. Worryingly, recent evidence suggests that this has not been the case in Africa.1 One important determinant of firm productivity is the quality of management practices, and new data sheds light on the state of management in some African countries.

Management around the world

For over 12 years, the World Management Survey (WMS) has been collecting data on management practices using an interview-based methodology. It defines 18 key management practices and scores them from worst practice (1) to best practice (5). The focus is on such practices as monitoring, target-setting and incentives/people management. Research using this data suggests a strong correlation between management and a series of productivity measures – such as firm size, profitability, sales growth, market value and survival. Experimental evidence further confirms a positive correlation.2 Indeed, researchers have found that the quality of management can help explain productivity differences between countries, and it is estimated that management accounts for close to a third of cross-country productivity differences.3 The WMS only surveys firms with 50 or more employees, which means a set of medium- and large-sized, more well-established firms. Although this is not a random sample relative to the full population, it is a random sample of the population of firms that have reached some scale and, arguably, have growth potential.